Vietnam will stick to a monetary policy that “supports economic growth” while keeping a close eye on inflation, the country’s central bank said Tuesday.
The Southeast Asian country’s gross domestic product (GDP) growth accelerated to 7.72% in the second quarter after growing 5.05% in the first quarter, but authorities warned of challenges such as rising inflation in the second half of the year.
“If inflation remains under control, monetary policy will be conducted in a way that supports economic growth,” the State Bank of Vietnam told Reuters in an emailed statement.
Central banks around the world are raising their key interest rates, some aggressively, to curb inflation that has been high in some countries for decades.
Consumer prices in Vietnam rose 3.37% in June from a year earlier, mainly due to an increase in the cost of food and energy. Vietnam aims to limit inflation to 4% this year.
The central bank said it has kept its key rate unchanged this year while helping local banks increase their liquidity, “and this has helped businesses and the economy better access bank loans.”
The central bank said it is encouraging financial institutions to cut costs in order to lower their lending rates to support business activities, adding that it will ensure their liquidity by using open market operations.
“The central bank will closely monitor the domestic and international monetary market and the inflation situation in order to pursue an interest rate policy that contributes to macroeconomic stability and inflation control,” it said.
Vietnam is targeting GDP growth of 6.0%-6.5% this year, recovering from last year’s growth of 2.58%, the slowest pace in decades due to the pandemic.
@ Reuters
